15 March 2009

U.S. Jobless Rates Continued To Soar In January

As Originally Posted at The Wall Street Journal

Unemployment rates rose in nearly every state in January, illustrating that no region has been immune to the recession that has grown broader as it has deepened.

Jobs remain hardest to find in the areas that were first hit by the economic slowdown: The highest unemployment rates were in manufacturing-heavy states in the Midwest, and in states that suffered the most from the housing bust, including California, Nevada and Florida. States in the Northeast and South that had been less affected by the housing bust continue to be generally better off.

Between December and January, nearly half of states saw unemployment rates rise a full percentage point, a remarkable jump. Georgia, where unemployment rose to 8.6%, and Rhode Island, at 10.3%, have the highest unemployment rates since at least 1976, when the government data begin.

"It really puts the exclamation point on how this recession, which is rooted in large part in financial markets, touches all sectors and touches them quickly," said Luke Tilley, a senior economist at forecasting firm IHS Global Insight.

The lowest unemployment rate was in Wyoming, with 3.7%, followed by North Dakota, Nebraska and South Dakota.

The steep rise in state unemployment rates is the latest indicator showing how consumers and businesses essentially froze at the end of 2008, and have yet to resume meaningful spending. In the last three months of 2008, gross domestic product fell at a 6.2% annual rate, the fastest since the depths of the 1982 recession, and much faster than the government had previously estimated.

Likewise, state employment data show job losses were much worse than originally thought. In California, for instance, the government previously estimated that the state's economy had shed 257,000 jobs in 2008. Wednesday's revision showed the state actually lost 443,000 jobs.

A number of export-heavy states, where until recently overseas demand had offset U.S. weakness, have seen their unemployment rates skyrocket as the recession spread overseas.

South Carolina, host to many international companies and other exporters, saw its unemployment rate rise 4.7 percentage points in the year ended January, tied for second fastest in the nation. (Unemployment in North Carolina, which has a large banking and manufacturing presence, also rose 4.7 percentage points over the year.)

Several economists believe the unemployment rate will hit 10% by the time a recovery is under way, but four states have already eclipsed that level. California, Rhode Island and South Carolina had unemployment rates between 10.1% and 10.4% in January. In Michigan, where the economy was teetering even before two of the Big Three auto makers sought emergency loans from the government, the unemployment rate jumped to 11.6%.

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